Budget committee OKs tax cut plan

Wisconsin Republicans broke an internal logjam on Gov. Scott Walker's $504 million tax cut plan Wednesday, pushing a deal through the Legislature's finance committee designed to win a key vote from a hesitant GOP senator.

Walker wants to use the state's projected $977 million surplus for property and income tax cuts. He proposed a bill earlier this month that would send $406 million to technical colleges to reduce their property tax hit and cut income taxes by $98.6 million by slicing the lowest bracket from 4.4 percent to 4 percent. The moves would save the owner of a median-value home $131 on the coming December property tax bill and the average worker $46 a year in income taxes.

Assembly Republicans passed the package earlier this month, eager to finish it before the legislative session ends in April and they hit the campaign trail. But the legislation bogged down in the Senate after Robert Cowles, R-Green Bay, balked out of concerns the plan would increase a projected shortfall in the next state budget to $807 million.

Cowles' vote is crucial. Republicans hold an 18-15 edge in the Senate but Dale Schultz, R-Richland Center, is a moderate and doesn't support the plan because he, too, fears it adds too much the state's deficit. That means Republicans need Cowles to pass the package.

Republicans came up with a compromise late Tuesday to get Cowles on board.

Advertisement

They put $118 million in the state's general fund rather than its rainy day account, requiring state agencies to return $38 million to the general fund during the fiscal year that begins July 1, 2015, and dropping a provision setting out $7.5 million in sales tax exemptions for construction companies. The revisions would shave $156 million off the budget shortfall.

The Joint Finance Committee took up the changes during a hearing Wednesday. Democrats on the panel criticized the plan, questioning why state agencies should have to scrimp in the face of a huge surplus. They also said the tax cuts unfairly benefit the rich.

"You are so sour about giving people their money back. You're just so unhappy things are going well," said Sen. Alberta Darling, R-River Hills, one of the committee's two co-chairs. "I just can't believe you don't want to give the money back. I don't know why you can't cheer for Wisconsin."

Ultimately the committee approved the changes 12-4 along party lines. The Senate plans to take up the bill on March 4. Cowles said after the vote he supports the package.

"I'm happy the structural deficit is moving down," Cowles said.

The Assembly would have to approve the bill again since both houses must send identical language to the governor for his signature.